Stamp duty explained
When purchasing a property, it can feel like there are so many different types of government fees and charges you have to pay. Stamp duty is just one of those fees.
Stamp duty is a tax that is charged by State and Territory Governments when you purchase a property or transfer the title to someone else. It’s also levied on large asset purchases, like when buying a car.
It usually needs to be paid within 30 days of the property transaction, which is upon settlement of the property in real estate terms. Usually your conveyancer or solicitor would organise to pay stamp duty as part of the settlement process. Just check the process with them.
How much stamp duty do you pay in Australia?
Stamp duty differs in every State and Territory across Australia, meaning the amount you’ll need to pay will change depending on where the property is located. However, as a broad rule, stamp duty is calculated as a percentage of the sale price. Some states also charge an additional levy for investment property purchases – so make sure you work through your full situation ahead of settlement.
However, stamp duty isn’t the only government-imposed tax you’ll usually need to pay when purchasing a property. You’ll also need to pay a mortgage registration fee, transfer fee and a title search fee. These can vary widely depending on where you’re buying, so it can pay to check the total fees and charges due on settlement.
This means the higher your property price, the more government fees and charges you’ll pay. Stamp duty rates (along with eligible rebates and incentives) can change, so make sure to check for the most up to date information, or try our stamp duty calculator to see how much you may need to pay.
Stamp duty for first home buyers
In some circumstances, you may be eligible for a concessional rate of stamp duty. Most states and territories have some type of concession for first home buyers, the amount of which depends on the value of the property and whether you’re buying a vacant block of land, purchasing a new property, or an existing dwelling.
In 2022, New South Wales announced an overhaul of stamp duty for first home buyers. A new land tax scheme will be introduced from 2023 which gives eligible first home buyers the option of paying stamp duty upfront, or paying an annual land tax.
While this might mean you could purchase your dream home sooner (the Government estimated it would shave off two years worth of saving time for the average first home buyer) make sure you talk through the implications with your solicitor or tax advisor to see which option could work best for you.
Stamp duty when refinancing
If you’re looking to refinance your home loan then you may need to pay stamp duty – a one-off fee charged on certain home loan transactions. If you’re unsure if stamp duty applies in your situation, then it could be a good idea to check with the relevant State or Territory Stamp Duty Office.
There are certain instances when you might be able to avoid paying stamp duty. For example, if the names of the borrowers are the same and the amount of the loan remains the same, then you might not be required to pay the fee. Refinancing with the same lender could also help you avoid this cost.
When you're ready to get a home loan, and learn more about stamp duty and other fees, speak to one of our Pepper Money Lending Specialists on 137 377.
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